Arguments Against Minimum Wage
ABSTRACT
The history of the minimum wage in this country go back almost 100 years to the great depression and FDR. The arguments for and against the minimum wage go back just as far and tend to be emotionally charged. But does this policy, established during the great depression still make sense today? As the economy enters a new, global, era does the minimum wage help or hurt us? Through a review of arguments both for and against the minimum wage, and a review of the research that supports or disproves those arguments this paper hopes to present a balanced non-emotional look at the minimum wage and present a recommendation for how to approach this issue in the future.
INTRODUCTION AND SUMMARY OF CURRENT LEGISLATION/REGULATION The …show more content…
While the sentiment of helping the poor is admirable, it appears this argument is based on emotion rather than fact. Based on the conclusions drawn from the Southern Economic Journal’s 2010 article ‘Minimum Wages and Poverty’; “minimum wage increases between 2003 and 2007 had no effect on state poverty rates. Moreover, the proposal to raise the federal minimum wage to $9.50 per hour is unlikely to be any better at reducing poverty because (i) most workers (89.0%) who are affected are not poor, (ii) many poor workers (48.9%) already earn hourly wages greater than $9.50 per hour, and (iii) the minimum wage increase is likely to cause adverse employment effects for the working poor” (Sabia, J., & Burkhauser, R. (2010). Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor? Southern Economic Journal, 76(3), 592–623). The truth of the matter is that “minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 21 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over” (Characteristics of Minimum Wage Workers: 2012. (2013, February 26). U.S. Bureau of Labor Statistics. Retrieved September …show more content…
The definition can mean anything to anyone. The fact is that small businesses fail every day for a variety of reasons and that “empirical studies have documented other methods by which businesses and markets adjust to minimum wage increases” (Wilson, Mark. "The Negative Effects of Minimum Wage Laws." cato.org. CATO Institute, 21 June 2013. Web. 16 Sept. 2013. http://object.cato.org/sites/cato.org/files/pub/pdf /PA701 .pdf). The adjustments that businesses and markets make in response to minimum wage increases span the spectrum from relatively minor such as employers cutting worker training and cutting back or eliminating fringe benefits to relatively major adjustments like installing labor saving devises or even the hiring of illegal/undocumented workers. Ultimately left with no other options business will respond by passing increased cost on to the consumers. Supporting this theory is a 2004 “comprehensive review of more than 20 minimum wage studies looking at price effects found that a 10 percent increase in
The history of the minimum wage in this country go back almost 100 years to the great depression and FDR. The arguments for and against the minimum wage go back just as far and tend to be emotionally charged. But does this policy, established during the great depression still make sense today? As the economy enters a new, global, era does the minimum wage help or hurt us? Through a review of arguments both for and against the minimum wage, and a review of the research that supports or disproves those arguments this paper hopes to present a balanced non-emotional look at the minimum wage and present a recommendation for how to approach this issue in the future.
INTRODUCTION AND SUMMARY OF CURRENT LEGISLATION/REGULATION The …show more content…
While the sentiment of helping the poor is admirable, it appears this argument is based on emotion rather than fact. Based on the conclusions drawn from the Southern Economic Journal’s 2010 article ‘Minimum Wages and Poverty’; “minimum wage increases between 2003 and 2007 had no effect on state poverty rates. Moreover, the proposal to raise the federal minimum wage to $9.50 per hour is unlikely to be any better at reducing poverty because (i) most workers (89.0%) who are affected are not poor, (ii) many poor workers (48.9%) already earn hourly wages greater than $9.50 per hour, and (iii) the minimum wage increase is likely to cause adverse employment effects for the working poor” (Sabia, J., & Burkhauser, R. (2010). Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor? Southern Economic Journal, 76(3), 592–623). The truth of the matter is that “minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 21 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over” (Characteristics of Minimum Wage Workers: 2012. (2013, February 26). U.S. Bureau of Labor Statistics. Retrieved September …show more content…
The definition can mean anything to anyone. The fact is that small businesses fail every day for a variety of reasons and that “empirical studies have documented other methods by which businesses and markets adjust to minimum wage increases” (Wilson, Mark. "The Negative Effects of Minimum Wage Laws." cato.org. CATO Institute, 21 June 2013. Web. 16 Sept. 2013. http://object.cato.org/sites/cato.org/files/pub/pdf /PA701 .pdf). The adjustments that businesses and markets make in response to minimum wage increases span the spectrum from relatively minor such as employers cutting worker training and cutting back or eliminating fringe benefits to relatively major adjustments like installing labor saving devises or even the hiring of illegal/undocumented workers. Ultimately left with no other options business will respond by passing increased cost on to the consumers. Supporting this theory is a 2004 “comprehensive review of more than 20 minimum wage studies looking at price effects found that a 10 percent increase in